Full Year 2013 Highlights
- Adjusted EPS of $1,41, up 45,4%
- Net Yield increase of 4,3% (or 4,2% on a Constant Currency basis)
- Revenue of $2,6 billion, up 12,9%
- Adjusted EBITDA of $647,2 million, up 16,5%
- Financial transaction milestones, including initial public offering, optimize capital structure
- Introduction of Company’s first Breakaway-class ship, Norwegian Breakaway
- Commenced development of recently acquired island destination in Belize
Fourth Quarter 2013 Highlights
- Adjusted EPS of $0,19 compared to $0,04 in prior year
- Net Yield increase of 4,8% (or 4,7% on a Constant Currency basis)
- Revenue of $600,3 million, up 19,3%
- Adjusted EBITDA of $124,1 million, up 19,9%
Full Year 2013 Results
“A year that began with a highly successful initial public offering, followed by other transactions which resulted in a strong balance sheet and credit metrics, and the launch of the first ship in our Breakaway-class, Norwegian Breakaway, will undoubtedly be remembered as one of the seminal years in Norwegian’s 47-year history,” said Kevin Sheehan, President and CEO. “The hard work of 25.000 Norwegian team members, all with a keen focus on our vision and mission, has been the catalyst for reaching these milestones, reporting solid financial performance in a challenging year for the industry and positioning the Company for measured, disciplined growth” continued Sheehan.
For the full year 2013, the Company reported Adjusted EPS of $1,41, which is above the top range of the Company’s guidance and a 45,4% increase from 2012 Adjusted EPS of $0,97. Adjusted Net Income for the year was $295,8 million compared to $173,1 million in 2012. On a GAAP basis, net income and diluted earnings per share were $101,7 million and $0,49, respectively, the difference primarily relates to the prepayment and refinancing of certain credit facilities and the redemption of certain of the Company’s senior notes in connection with the Company’s initial public offering and refinancing activities.
A 13,4% improvement in Net Revenue was the result of the addition of Norwegian Breakaway to the Company’s fleet, along with an increase in Net Yield of 4,3% (or 4,2% on a Constant Currency basis) from higher ticket pricing and on-board spend, partially offset by three incremental scheduled dry docks.
Adjusted Net Cruise Cost excluding Fuel per Capacity Day increased 3,6% (or 3,4% on a Constant Currency basis) mainly due to the aforementioned dry docks along with inaugural and other new build launch-related expenses. The Company’s fuel price per metric ton, net of hedges, was $675 compared to $664 in 2012 while fuel consumption per Capacity Day decreased 3,3% in the period.
Interest expense, net for the year was $282,6 million and included $160,6 million in charges related to the aforementioned prepayments and refinancing of certain credit facilities and redemption of certain of senior notes. Excluding these charges interest expense, net was $122,0 million compared to $189,9 million in the prior year.
Fourth Quarter 2013 Results
The Company reported fourth quarter 2013 Adjusted EPS of $0,19 on Adjusted Net Income of $40,5 million compared to $0,04 and $5,6 million, respectively, for the same period in 2012. Net income and diluted earnings per share on a GAAP basis were $36,1 million and $0,17, respectively.
Net Revenue for the period increased 19,3% from the addition of Norwegian Breakaway to the Company’s fleet and a 4,8% increase in Net Yield (4,7% on a Constant Currency basis), partially offset by a dry dock for Norwegian Sky. Adjusted Net Cruise Cost excluding Fuel per Capacity Day increased 7,6% primarily due to the dry dock in the period and the acceleration of certain scheduled repairs and maintenance that the Company performed in the fourth quarter. Fuel price per metric ton, net of hedges, decreased 6,6% to $649 from $695.
Interest expense, net decreased to $24,6 million from $47,7 million in 2012, benefitting from the aforementioned financial transactions.
2014 Guidance and Sensitivities
In addition to the results for the fourth quarter and full year 2013, the Company also provided the following guidance for the first quarter and full year 2014, along with accompanying sensitivities.
In thousands except per share data
|
First Quarter 2014
|
Full Year 2014
| |||||
As Reported
|
Constant Currency
|
As Reported
|
Constant Currency
| ||||
Net Yield
|
3,5 to 4,0%
|
3,5 to 4,0%
|
Approx. 4%
|
Approx. 4%
| |||
Adjusted Net Cruise Cost
Excluding Fuel per Capacity Day (1) |
2,5 to 3,5%
|
2,5 to 3,5%
|
(2,0) to (1,0)%
|
(2,0) to (1,0)%
| |||
Adjusted EPS
|
$0,20 to $0,24
|
$2,20 to $2,35
| |||||
Depreciation and amortization
|
$60 to $64 million
|
$245 to $255 million
| |||||
Interest Expense, net
|
$32 to $37 million
|
$135 to $145 million
| |||||
Effect on Adjusted EPS of a
1% change in Net Yield (2) |
$0,02
|
$0,11
| |||||
- Q1 includes incremental dry dock and new build launch and inaugural expense
- Based on midpoint of guidance
The following reflects the Company’s expectations regarding fuel consumption and pricing, along with accompanying sensitivities.
First Quarter 2014
|
Full Year 2014
| ||
Fuel consumption in metric tons
|
127.000
|
515.000
| |
Fuel price per metric ton, net of hedges
|
$660
|
$695
| |
Effect on Adjusted EPS of a 10% change
in fuel prices, net of hedges (in thousands) |
$0,02
|
$0,07
| |
As of December 31, 2013, the Company had hedged approximately 65%, 53%, and 15% of its remaining 2014, 2015 and 2016 projected metric tons of fuel purchases, respectively.
Future capital commitments consist of contracted commitments, including future expected capital expenditures for business enhancements and ship construction contracts. As of December 31, 2013, anticipated capital expenditures together with amounts for ship construction and related export credit financing were as follows (in thousands, based on the euro/U.S. dollar exchange rate as of December 31, 2013):
Full Year
| |||||||
2014
|
2015
|
2016
| |||||
Ship Construction
|
$ 802.650
|
$ 968.101
|
$ 116.336
| ||||
Ship Financing
|
(705.968)
|
(761.085)
|
(46.069)
| ||||
Ship Construction net of financing
|
$ 96.682
|
$ 207.016
|
$ 70.267
| ||||
Business Enhancement Capital Expenditures, including ROI
Capital Expenditures (1) (2) (3) |
$ 98.000
|
$ 81.000
|
$ 92.000
| ||||
Incremental ROI Capital Expenditures for exhaust gas scrubbers
|
$ 27.000
|
$ 29.000
|
$ 8.000
| ||||
- 2014 includes $38 million in ROI Capital Expenditures
- 2014, 2015 and 2016 exclude amounts for exhaust gas scrubbers
- 2014 and 2015 include investment for development of the Company’s future cruise destination in Belize
New build Update and Other Highlights
On January 10, 2014 the Company took delivery of the latest ship in its fleet, the 4.000-berth Norwegian Getaway. The second in the Company’s Breakaway-class fleet, the ship offers a host of game-changing features and amenities that have been hailed as revolutionary when first introduced in 2013 on her sister ship, Norwegian Breakaway. These features include The Waterfront, a 400 metre-outdoor promenade lined with restaurants and lounges and 678 Ocean Place, the hub of the ship’s nightlife activities with additional restaurants, entertainment venues and more. Unique to Norwegian Getaway are entertainment offerings including the hit Broadway musical Legally Blonde, the Latin-inspired Broadway ballroom show Burn the Floor and the first GRAMMY Experience at sea. The ship also boasts the Illusionarium, an extraordinary venue for the ship’s first-at-sea magic, illusion and special effects dinner show.
The ship also marks Norwegian’s return to the year-round, 7-night Caribbean market from Miami after a decade-long absence. Said Sheehan on Norwegian Getaway’s arrival, “Norwegian pioneered cruises from the United States over ten years ago by expanding its offering to homeports around the country. Today, as we expand our fleet through our disciplined new build programme, we felt that now was the right time to not only return to Miami year-round, but to return with the largest ship to homeport year-round in the Cruise Capital of the World.” Continued Sheehan, “Her 7-night sailings to the Caribbean provide a consistent option for our guests and travel partners looking for a Freestyle Cruising experience from Miami any time of year.” As “Miami’s Ultimate Ship”, Norwegian Getaway showcases venues and features reminiscent of Miami and the surrounding areas, including The Tropicana Room, which harkens to 1950’s Miami Beach dining and dancing halls, the Sugarcane Mojito Bar and the Sunset Bar, inspired by Ernest Hemingway’s Key West.
Construction on the Company’s current new builds, the 4.200-berth Norwegian Escape and Norwegian Bliss is on schedule for deliveries in the fall of 2015 and spring of 2017, respectively.
On February 17, 2014 the Company announced the addition of F. Robert Salerno and Robert Seminara to its board of directors. Mr. Salerno is a veteran of the car rental industry, beginning his career with The Hertz Corporation and advanced through increasingly broader operating and leadership positions. Mr. Salerno later joined Avis as Vice President for the New York Area, after which he was promoted to President and Chief Operating Officer, a position he held until 2010 when he became Vice Chairman until his retirement in 2011. During his tenure the company moved from employee-owned to publically traded on NASDAQ as well as acquired Budget to form the Avis Budget Group, on whose board he currently serves. Salerno joins the board as an independent director and replaces Steve Martinez as a member of the audit committee. Mr. Seminara is a Senior Partner of Apollo having joined in 2003 and oversees the firm’s efforts in the packaging sector. Prior to that time, Mr. Seminara was a member of the Private Equity group at Evercore Partners from 1996 to 2003. Prior to his tenure at Evercore, Mr. Seminara was employed by Lazard Frères & Co. in the Media & Communications group. Mr. Seminara serves on the board of directors of Berry Plastics Group, Inc. In addition, he is a member of the Board of Managers of Momentive Performance Materials.
